Preparing and Filing SEC Form D

Form D
Securities Law Blog

Regulation D under the Securities Act of 1933, as amended (the “Securities Act”) provides exemptions that permit a company to offer and sell its securities without complying with the registration statement requirements of the Securities Act if certain conditions are met.  A company claiming an exemption under Regulation D is required to file a Form D – Notice of Sales with the Securities and Exchange Commission (the “SEC”), within fifteen days after the first sale of securities in the offering.  This publication is intended to serve as a summary of the SEC requirements for filing Form D, and does not purport to be a complete discussion of the issues summarized herein and does not create an attorney client relationship. For more information regarding the Amendments or regarding their application to securities offerings under Regulation D, please contact Hamilton & Associates Law Group, P.A. by telephone at 561-416-8956 or email at info@securitieslawyer101.com.

Summary of the Regulation D Exemptions

Regulation D provides three transactional exemptions from registration. These are Rules 504, 505 and 506.  Regardless of the exemption, Regulation D requires that the issuer file a Form D with the SEC.

What is a Notice of Sales on Form D?

Form D serves as the official notice of an offering of securities made without registration under the Securities Act in reliance on the exemptions provided by Regulation D, Section 3(c) or Section 4(6) under the Securities Act. Form D serves as a means (i) to collect data for use in the SEC’s rulemaking efforts and (ii) to enforce the federal securities laws, including enforcement for the exemptions found in Regulation D. An issuer relying on a securities registration exemption provided by Regulation D, Section 3(c) or Section 4(6) is currently required to file a paper copy of Form D with the SEC not later than 15 days after the first sale of securities.

State Blue Sky Laws

Under Section 18(b)(4)(D) of the Securities Act, any private placement made in compliance with Rule 506 of Regulation D preempts state Blue Sky laws.  Section 18(c) of the Securities Act, grants states the authority to require a Company to make a notice filing and pay a filing fee in connection with its Rule 506 offering.  As a result, many states adopted statutes and rules mirroring Regulation D.   Most states require the filing of Form D and the payment of a filing fee.

Amending Form D

Rule 503 requires that a Form D be amended in the following three circumstances:

(i) to correct a material mistake of fact or error in the previously filed Form D;

(ii) to reflect a change in the information provided in a previously filed Form D that occurs prior to the termination of the offering; and

(iii) annually, on or before the first anniversary of the Form D filing or the most recent amendment, if the offering is ongoing at that time.

Electronic Filing of Form D

Like most filings made with the SEC, Form D must be filed electronically through its Electronic Data Gathering And Retrieval System (“EDGAR”).  Form D may be signed electronically. The Form D is publicly available on the SEC Website upon filing.  In order to file a Form D electronically, the issuer must file a Form ID with the SEC to obtain EDGAR filer codes.

Form D Information

The following summary is intended to provide a by item description of the new Form D resulting from the Amendments. A copy of the new Form D is attached to this client publication.

Item 1 – Identity of the Issuer

Form D requires basic identifying and contact information about the Company and related persons.

Item 2 – Principal Place of Business and Contact Information

Form D requires that companies provide their principal place of business addresses and telephone number.

Item 3 – Related Persons Disclosure

Form D Item 3 requires that Company’s disclose “related persons” to the extent such persons are promoters or are the company’s executive officers and directors.

Item 4 – Industry Group

Form D requires companies to identify their industry group from the form’s specified list.

Item 5 – Issuer Size

Form D requires companies provide a revenue range from information in the Form D or choose the “Decline to Disclose” or “Not Applicable” option for a fund that seeks asset appreciation only.  The revenues should be calculated based on the company’s most recently completed fiscal year. Where a company has been in existence for less than a year, it may identify its revenues from inception until the date of the filing of the Form D.

Item 6 –Exemption and Exclusion

As carried over from the current Form D requirement, the issuer must still identify the exemption or exemptions being claimed for the offering (i.e. Rule 504, 505 or 506 and Section 4(6), as applicable). However, the issuer is now required to identify the specific paragraph or subparagraph of any Rule 504 exemption being claimed as well as any specific paragraph of Investment Company Act Section 3(c) that the issuer claims for an exclusion from the definition of “investment company” under the Investment Company Act.

Item 7 – Type of Filing

Item 7 requires the company to indicate whether the Form D filing is a new filing or an amendment to a previously filed Form D.  With respect to an amendment to a previously filed Form D, the SEC requires an amendment for an ongoing offering where there has been a material change in information filed about the offering and where basic information previously submitted about the issuer has materially changed.

Item 8 – Duration of Offering

Item 8 requires the issuer to indicate whether the offering will last more than a year.

Item 9 – Type of Securities Offered

Item 9 requires that the company specify the type of securities being offered, such as debt or equity, with additional categories of securities added. The company must specify all categories that apply to the securities that are the subject of the exemption specified in Item 6 of the Form D.

Item 10 – Business Combination Transactions

Item 10 requires the company to indicate whether the offering is being made in connection with a business combination such as an exchange (tender) offer, a merger or acquisition, regardless of the type of offering.

Item 11 – Minimum Investment Amount

Item 11 requires the company to specify the minimum investment amount per investor that was or will be accepted in the offering.

Item 12 – Sales Compensation

Item 12 generally requires the company provide information relating to sales compensation. Item 12 requires the issuer to provide the Central Registration Depositary (“CRD”) number of each person that is a compensation recipient   named in response to Item 12, provided the person has a CRD number.  Item 12 also requires the issuer to provide the CRD number for any person that receives sales compensation and the person’s associated broker-dealer, if any.

Item 13 – Offering and Sales Amounts

Item 13 requires the company provide the amount of total sales and the total amount of the offering.

Item 14 – Investors

Item 14 requires the issuer disclose that it intends to sell securities to persons who do not qualify as accredited investors and the number of such persons who already have invested. The company must specify the total number of investors in the offering including both accredited and non-accredited investors.

Item 15 – Expenses and Use of Proceeds of Offering

Item 15 requires that the issuer provide the amounts paid for sales commissions and, separately state, finders’ fees paid or to be paid in the offering.

Item 16 – Use of Proceeds

Item 16 requires the company to report the gross proceeds used or proposed to be used for payments to related persons including officers and directors.

Signature and Submission

Form D may be electronically signed and the form includes an undertaking to provide offering materials to the SEC upon request.

This client publication is intended only as a general discussion of these issues. It should not be regarded as legal advice. We would be pleased to provide additional details or advice about specific circumstances if desired. For more information on the topics covered in this issue, please contact Hamilton & Associates Law Group, P.A. at 561-416-8956 or visit https://www.securitieslawyer101.com.

Please note that the prior results discussed herein do not guarantee similar outcomes.

For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at info@securitieslawyer101.com or visit www.securitieslawyer101.com.   This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com